Interesting post by Paddy Deighan that is deserving of a re-blog. The title of his post speaks for itself. The interesting thing is how many of us believes these predictions anyway. They will be revising their prediction at a later date. Very good information

Fannie Mae indicates slow growth for the near term. Fannie Mae is conceding that at least in the “near term…continuation of below-potential economic growth with a two percent growth rate expected for 2013” could “continue to be par for the course for the near term”. The GSE’s chief economist, Doug Duncan, said yesterday that the current “fiscal policy climate will act as a drag on growth this year with possible implications on the direction of the economy in the long term.” Not surprisingly, Duncan cited the fiscal cliff and debt ceiling debates as factors “likely to suppress consumer spending in the first half of 2013.” However, he added, if these issues are resolved via real solutions, growth could easily accelerate in the second half of the year.

Ultimately, said Duncan, the housing market will likely determine the true nature of the United States’ “new normal,” and right now that is a good thing since most analysts are determinedly pointing at housing as the sole “bright spot” in the current economy. With homebuilder confidence on the rise, housing starts up, and home prices rising, if the housing recovery sticks it could pull overall economic growth along with it. In fact, some optimistic lenders like Deutsche Bank are predicting appreciation for 2013 as high as 10 percent; if that were, in fact, the case, that would translate in more than $860 billion added to the country’s household assets. Duncan says that would be a best-case scenario, however, warning that for now, he “anticipates overall growth in 2013 will remain below its potential, extending what has been a slow recovery.”

I have read Mike Linkenauger’s blogs about his belief that Fannie Mae is trying to (artificially) stimulate the market by keeping inventory low and demanding 10-20% premiums over fair market values in its short sale approvals. So it is interesting that Fannie Mae economists suggest slow growth rates since Fannie is contributing to the perceived growth rates.